A space that allows me to pontificate on China, alternative fuel vehicles, and anything else I feel like opining about

Will good connections equal success for NEVS in China’s EV market?

June 16, 2016

So let me say right up front that I wrote a pretty mean blog in December of 2013 about Kai Johan Jiang, the Chinese-Swedish founder of National Electric Vehicle Sweden AB, or NEVS. Not about him personally. But about his purchase of Saab. I mean, Saab isn’t that sexy a brand and NEVS was making some pretty bold claims back then. NEVS is still making some bold claims. But I’m ready to eat crow if I turn out to be wrong. So I’m taking a second look at NEVS.

This second look was prompted after a friend of mine visited NEVS in Tianjin and had some positive things to say about the Chinese-Swedish company. The most positive thing he reported, admittedly, is that NEVS seems to have excellent connections with China’s central government and also a steady stream of funding via private investment and also incentives from the Tianjin Binhai Hi-Tech Industrial Development Area (THT), which is building a new factory for NEVS and has given them the land for free, he said.

My friend was also very impressed with Kai Johan Jiang, who made a fortune from biomass. Jiang founded a company in China that uses Swedish technology to produce electricity using biomass. The company, called (apparently, I am still trying to envision the org chart for Jiang’s companies) National Bioenergy Group, has no trouble selling every kilowatt hour it is generating to China’s State Grid, said my friend. “It appears (Jiang) has extremely good connections with the State Grid,” said my friend.

But, said my friend, Jiang sold that business three years ago and used the proceeds to buy Saab. On his LinkedIn page, Jiang is listed as Chairman of State Holdings. State Holdings is based in Beijing. And his company, National Modern Energy Holdings (NME), is described as the main owner of NEVS on the NEVS website. NME also owns State Holdings. Got that?

Jiang’s good relations with State Grid paid off in March of this year. NEVS signed a contract to provide “mobility solutions” and supply electric vehicles to the State Grid. That is a sweet contract. In fact, NEVS has been on an acquisition trail ever since it was founded in April of 2012. It acquired the main assets of Saab in August of that year. You can see the rest of its acquisitions on its timeline. Clearly NEVS has funding.

Headquartered in Sweden, NEVS has production facilities in Sweden, invested in a production facility in Fujian, and is building one in Tianjin. It plans to use the Saab 9-3 platform to produce several pure electric vehicles, and is developing a platform of its own for another lineup of EVs.

Let me digress a bit. I must say that NEVS has been a pleasure to deal with. For one, its website is lovely. Nice looking, and more importantly full of useful information. And its public relations people are actually helpful! Though I didn’t get the interview I requested, they did answer my questions in a timely manner. So that also makes me think well of NEVS.

So, back to its production plans. It will launch the 9-3 EV sedan, using the Saab platform, in China in 2017. NEVS plans to start to produce painted bodies in Sweden then ship them to China for final assembly. It will also manufacture a limited number of 9-3 EV sedans in Sweden for sale there.

Meanwhile, NEVS is developing its own Phoenix architecture, a scalable and modular platform that “makes it possible to manufacture cars from the B to the E segment,” said NEVS director of communications and public affairs Mikael Oestlund (there is an umlaut on the O but I can’t reproduce it. So one puts an e, right?) In an email.

In 2019 or 2020 NEVS plans to launch a lineup of EVs based on the Phoenix architecture. It will include: Distinctive Family SUV, D segment; Active All-rounder D segment fastback; Urban Adventurer D fastback x (I am reproducing what NEVS sent me. Not sure what x stands for); Sporty Urban SUV, C segment SUV. He sent some sketches, which are not of actual models, he said, rather they are examples of the types of vehicles NEVS plans to develop.

Quite ambitious. And they will be entering an already crowded SUV segment in China. I asked the spokesman why NEVS thought it would be successful in China. He replied: “We think we can deliver a high quality EV product, based on the innovative Swedish Saab car heritage. We have already interesting framework agreements for fleet sales in China.”

By framework agreement I assume he is referring to the $12 billion agreement with Panda New Energy Vehicle to deliver an initial 150,000 EVs, and later an additional 100,000 EV “products and services.” Those deliveries will begin in 2017, said Oestlund, beginning with the 9-3 EV sedan, and also transport and logistics vans. The vans will be produced at the plant in Fujian.

The deal with Panda was announced in December of 2015. I am skeptical. Panda is a new energy vehicle leasing company “cooperating with many chauffeured car service platforms in China.” I think it must have ties to large SOEs or local governments that are going to be required to include new energy vehicles in their fleets going forward. So a captive market of sorts. Nonetheless, I am skeptical.

I asked Oestlund if NEVS was confident the agreement would be executed. “We have a framework agreement that we are planning for to be able to deliver upon,” he wrote in his reply. Good luck.

In any case, because NEVS is a very professional company that, as mentioned, seems to have excellent connections in China, it may have a chance. I will reserve judgement and follow its progress with interest.